Will Obama's Plan Work?

September 9th, 2011

The Daily Beast
By Zachary Karabell
Sept 8, 2011

President Obama’s speech to Congress hewed closely to the details that had already been leaked, save for the dollar amounts, which were considerably larger.  Even so, the $450 billion price tag is somewhat misleading in that much of that is not new spending or new tax breaks but rather an extension of breaks and unemployment benefits that are already in place. Given that payroll tax cuts have not generated employment in the past two years, it’s is a stretch to see how they will suddenly do so now. As for unemployment benefits, they are a vital safety net, but that isn’t the same as job generating.

It’s also a challenge to see how the other provisions will change the employment landscape. The tax breaks for businesses to hire workers who have been looking for months are generous, but the employment conundrum is that companies haven’t needed to hire workers—not that they simply need incentives to hire workers. Even increased demand—for manufactured goods for instance—doesn’t necessarily trigger a need for more workers. Many companies can increase output with their current work force.

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